Housing stress hits hard as rent hikes approach grim limits

Australian renters are feeling the squeeze as sky-high rents push the majority into housing stress, with the situation now so bad that experts think prices might be hitting a grim ceiling.

Figures published on Monday by advocacy group Everybody’s Home found four in five renters have been plunged into housing stress amid double-digit price hikes across major capital cities.

The group’s spokesperson Maiy Azize said the survey of 750 people shows renters are suffering “extreme hardship”, with many at risk of becoming homeless because of the financial pressure.

“These figures and the stories behind them are harrowing,” Ms Azize said on Monday.

“We’ve heard from people worried they will become homeless with their children, renters in extreme hardship, and older women who are considering sleeping in their cars or on the streets because they can’t find an affordable home.

“Others told us they feel hopeless, anxious and scared because they’re homeless or are at risk. Even people who own their own home are worried about what the future holds for their children.”

Vacancy rates ease

The data comes as rent growth begins to plateau because many Australians can no longer afford to pay higher prices, with vacancy rates also now easing slightly from earlier record lows.

Vacancy rates in Queensland rose to 1 per cent in the June quarter, for the first time in almost two years, according to Real Estate Institute of Queensland data published last week.

That mirrored earlier figures from Domain, which found vacancy rates are also incrementally rising in other states, including NSW and Victoria.

It is important to note, however, that vacancy rates remain incredibly tight and are well below long-term averages in most major cities.

The main reason for that is a huge resurgence in demand for rental housing post-COVID, with migration picking up now borders are open.

That’s run up against a persistent lack of available – and suitable – rental properties in major cities that advocates say requires immediate action.

Ms Azize said governments needed to urgently invest in more social and affordable housing than they were, to help ease the strain and push rents to more manageable levels.

“We need more social and affordable housing for people in extreme rental stress. Our shortfall is so big that some people in our survey have been waiting for over a decade,” she said.

“Social housing is the best way to free up cheaper rentals and boost the supply of affordable homes.

“The federal government must create 25,000 new homes each year to meet the social housing shortfall.”

Rent rises throw a spanner into inflation

New official rent data is due on Wednesday when the Australian Bureau of Statistics publishes June quarter inflation figures.

While the pace of price increases is set to ease, the elevated level of rents could throw a spanner in the works for the Reserve Bank, which is awaiting signs that price growth is on a downward trajectory.

The RBA is hoping inflation eases from the current 5.1 per cent annual rate to between 2-3 per cent by mid-2025. But persistently high rents, alongside high utility bills, risk throwing its plan off course.

That could mean even higher interest rates to compensate, after central bankers opted to pause in July in anticipation of Wednesday’s figures.

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